Computershare (CPU)

Citigroup have reduced their 12-month target price on share registry business
Computershare
by 30¢ to $8.50, keeping their “neutral" rating on the stock.

The broker is concerned that Computershare’s acquisition of Bank of New York Carnegie Mellon Shareholder Services gives the company large exposure to the United States, “a market that is now in clear structural decline".

That means even after cyclical factors such as the current market volatility fade away, Computershare is facing more challenging structural issues.

The analysts are forecasting a 2 per cent per annum contraction in registry revenues over the medium term, putting the onus on the non-registry part of the business to produce strong growth rates.

Nevertheless the high-margin registry business will generate surplus cash to the tune of around $US1 billion by 2015, opening the door for further acquisitions.